MNI BRIEF: Volatile Markets Justify Rate Activism - BOE Mann
MNI (LONDON) - The gradualist approach to policy setting backed by the majority on the MPC only made sense at a time of greater market stability, MPC member Catherine Mann said.
The cautious, gradual approach was pushed when markets were more stable and financial flows smaller as it avoided monetary policy injecting excess volatility but "these days, the volatility is coming from financial markets," and particualry cross-border spillovers and policymakers need to respond to changes in financial conditions, according to Mann.
Mann backed a 50 basis point cut at the February meeting having previously been the outlier in opposing any easing, although her support for rapid easing may not last long, however.
She said that larger rate reductions cut through market turbulence but she does not seem to favour moving far. "Keeping monetary policy restrictive for longer allows me to evaluate developments on inflation persistence," she said.(see MNI INTERVIEW: BOE Risks Repeating Pandemic Errors- Sentance )